Could Burma be the next emerging market miracle?

In Rangoon's hotel lobbies anticipation is high. Brash Australian miners rub shoulders with hard-nosed American private equity investors. Indonesian infrastructure specialists and Japanese salesmen scout out the terrain.

Everyone here is eager to be first out of the starting blocks as the economy of Burma, a previously isolated country, opens up for business.

The opportunities abound, in raw materials such as gems, timber, rubber and gas, but also in catering for a population of 55 million in need of everything from healthcare to smartphones.

"I think this is the last virgin market left in the world, the last untapped market," says Vinod Chugani, an American-educated Singaporean.

"This is one of last frontiers, along with North Korea and to some extent Iran," says Romain Caillaud, who heads the Rangoon office of Vriens and Partners, advising multinationals entering Burma.

Burma also sits at a key geographic junction.

"Just look at the map and you'll see the location is strategic, at the crossroad between India, China, Thailand, in the middle of one of the fastest growing regions in the world," he says.

Piles of cash

After 50 years the generals who governed Burma have stepped back and handed power to a nominally civilian government.

They have also begun the first tentative steps in reforming the economy.

And they have been rewarded with the suspension of sanctions by the West.

But 50 years of isolation from the global economy has taken its toll, above all on the financial system.

Banking cash in Rangoon is a big job

At the main Rangoon branch of Yoma bank, customers wander in with plastic bags full of bank notes.

Their voices are barely audible above the whirring and clicking of mechanical counting machines, lined up like washing machines in a launderette.

A dozen staff work their way through the stacks piled high on the tables.

American financial sanctions and a home-grown banking crisis have undermined Burma's banking system, so that now most people simply keep their money in cash.

If you want to buy a car you go to the showroom with a box full of notes. If you want to buy a house you drive over a car full of money.

There are a handful of cash machines now in Rangoon, but none that work for foreigners. Credit cards can be used, for a stiff fee, only at a few top-range hotels.

All this may soon change, with the lifting of American financial sanctions.

But the rudimentary banking system is not the only obstacle to doing business.

Capacity

The word on everybody's lips is "capacity". The biggest concern is that Burma lacks the human resources to cope with this tidal wave of change, at every level from the government administration to secretarial staff.

It could take another generation for Burma to be ready for this change

Peter Thein founded Myanmar Yellow Pages 20 years ago and now also runs a fast-growing market research company.

He says newcomers can get a shock on arrival due to the high price of property and the lack of qualified staff.

"Most of the people with any brains have left," he says.

Hence, although he has 10,000 potential employees on his recruitment database, he says only 10-15% of them are employable.

"One of the most difficult things is to try to get my staff to think," he says.

"There's no initiative because the education system has never taught the meaning of thinking."

On top of all that, there is the lack of clarity over the rule of law, an intermittent electricity supply, crumbling infrastructure and what Mr Thein calls the practice of paying "tea money" - small bribes to expedite the cumbersome bureaucracy.

An Asian tiger?

So, can Burma grasp the opportunity now unfolding?

Burma's domestic industry - hampered, but also sheltered, by the years of isolation - now faces the chill wind of competition.

At Myint Soe's garment factory on the outskirts of Rangoon, rows of women hunch over sewing machines and irons under neon lights, pressing, folding, hemming, in stifling heat.

Garment workers eye a better future without sanctions

This factory used to supply Kmart and Walmart in the United States. After sanctions were imposed two-thirds of the workforce were laid off.

"I think we can restore our contracts which we lost after the sanctions," says an upbeat Myint Soe.

"Foreign investors will bring markets with them and technology."

Clearly, Burma will have to compete primarily on the price of labour.

"We compare with Bangladesh but are lower than Cambodia wages, so we can compete," says Myint Soe.

International business entrepreneur Serge Pun owns property developments across Asia as well as his Burmese investments from banking to golf courses. He is also convinced Burma's future is bright.

"I have no doubt that Myanmar will be a new tiger," he says.

"Burmese people are very entrepreneurial."

But in answer to the question of how long it take Burma to catch up, Romain Caillaud says: "A very long time.

"Maybe in 20 years it will be at the level of Vietnam today in terms of infrastructure, telecommunications, financial services.